Acorns stock – the latest investing app to go public via SPAC

Acorns stock: Dwayne Johnson is about to see his Acorns grow into a mighty rock.

Last Thursday, Acorns, the all-in-one investing platform, announced it’s going public via SPAC – with a $2.2b valuation.

The aftermath of the meme stock frenzy

Maybe it was boredom, or maybe it was the meme stocks. Either way, the pandemic led to record growth for investing apps going with many capitalizing on the hype by going public.

Although the SPAC frenzy is fading, with just 10 SPAC deals in April vs. 109 in March – it’s still a popular choice for financial companies going public in recent months. Other financial investing platforms going public via SPAC include:

• SoFi (NASDAQ:SOFI), which offers a variety of financial services, begins trading this morning after completing its $8.7b SPAC deal.
• eToro (NASDAQ:FTCV), the social trading network, is going public via SPAC at a valuation of $10b.

Investors are still waiting for the big whale to go public – Robinhood.

Acorns stock: Plant an acorn, grow an ‘OAKS’ tree

Acorns was popularized as the savings app that rounds up your digital purchases and invests those sums through its trading app. Over the years, Acorns expanded into banking, retirement services and financial education tools.

The company, which will debut under the ticker “OAKS” once the deal closes, grew rapidly in recent years:

• $71m in 2021 sales – up 54% from 2021 with a projection of $126m for 2021.
• $65m in operating losses – and doesn’t expect to break even until at least 2024.
• 4m subscribers on its investing app – double the previous quarter’s.

Here’s what makes Acorn unique: While most investing apps make their money off transaction fees on trades, around 80% of Acorn’s revenue comes from subscriptions.

Meaning: Even if trading volume slows down post COVID – which is already down 60% from January’s peak – Acorns stock will be less impacted than other trading apps. If trading activity rises, Acorns stock will also benefit less than other apps.

Investors: Are Acorns destined to fall?

While SPACs have been incredibly popular in 2021, the share prices for companies going public via SPAC have underperformed.

• The De-SPAC index (NYSE:DSPC), an ETF that tracks companies going public via SPAC, is down over 30% since Feb.
• Trading activity continues to slow and the sector is becoming increasingly competitive.

With the reputations of SPACs taking a recent hit, investors could have a harder time seeing their acorns grow